Question
Elbrege Company manufactures a single product. Assume the following data for 2011. Fixed costs in total: Manufacturing $100,000 (Budgeted or planned and actual) Selling &
Elbrege Company manufactures a single product. Assume the following data for 2011.
Fixed costs in total: Manufacturing $100,000 (Budgeted or planned and actual) Selling & Admin $ 75,000
Variable costs per unit: Manufacturing $ 11 Selling & Admin. $ 2
There were 5,000 units in inventory January 1, 2011. During the year 25,000 units were produced and 28,000 units were sold. Planned or budgeted production was 20,000 units.
A. Under variable costing, the product cost of one unit would be:
B. Assume that the operating income under variable costing is $28,000. What is the operating income under absorption costing? (You do not need to prepare an income statement to answer this question and the Price per unit is not given.)
C. The Production Volume Variance (PVV) variance is:
D. Should the PVV be added or subtracted from COGS to make the adjustment?
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